Radiator Specialty Co. v. Arrowood Indem. Co.Â
253 N.C. App. 508
| N.C. Ct. App. | 2017Background
- Radiator Specialty Company (RSC) purchased a multi-carrier, multi-policy liability program (1976–2014) and later faced hundreds of benzene- and asbestos-related progressive disease claims arising from a limited period of product manufacture.
- RSC sued ~15 solvent insurers seeking declaratory relief about their duties to defend and indemnify RSC for past and future benzene/asbestos claims; some insurers had already settled with RSC.
- Key disputed legal questions: which trigger governs progressive disease claims (exposure vs. injury-in-fact), how to allocate costs spanning multiple policy years (pro rata vs. all-sums), and how excess/umbrella exhaustion should operate (horizontal vs. vertical).
- The trial court entered multiple partial-summary-judgment orders (trigger, allocation, exhaustion, and related issues) resolving many legal issues but not all claims or damages; six of those interlocutory orders were appealed or cross-appealed.
- The Court of Appeals dismissed the interlocutory appeals, holding the orders were not final, not Rule 54(b)-certified, and appellants failed to show the orders affected a substantial right that would be irreparably harmed absent immediate review.
Issues
| Issue | Plaintiff's Argument (RSC) | Defendant's Argument (Insurers) | Held |
|---|---|---|---|
| Appealability / interlocutory jurisdiction | Immediate review warranted because orders (trigger, allocation, exhaustion) will eliminate or greatly restrict RSC’s ability to obtain defenses in pending suits | Orders are interlocutory, not Rule 54(b)-certified, and do not affect a substantial right requiring immediate review | Appeal dismissed: orders are interlocutory, not certified, and RSC failed to demonstrate a substantial right or irreparable injury absent immediate review |
| Trigger: exposure vs. injury-in-fact | RSC urged injury-in-fact trigger (coverage when injury is medically established) | Insurers urged exposure trigger (coverage only when claimant was exposed) | Trial court applied exposure trigger; appellate review dismissed as interlocutory (no ruling on correctness) |
| Allocation: all-sums vs. pro rata | RSC sought all-sums (any triggered insurer liable for entire loss with right of contribution) | Insurers sought pro-rata (time-on-risk allocation across policy periods) | Trial court applied pro-rata; appellate review dismissed as interlocutory (no ruling on correctness) |
| Exhaustion: vertical vs. horizontal (umbrella/ excess attachment) | RSC favored vertical exhaustion (coverage shifts up once underlying policy for same period exhausts) | Insurers favored horizontal exhaustion (all underlying policies must be exhausted before umbrella pays) | Trial court applied horizontal exhaustion (Landmark, Zurich orders); appellate review dismissed as interlocutory |
| Zurich retained-limit erosion by settlements | RSC argued settlements/indemnity paid without Zurich’s consent should erode Zurich’s retained limit to trigger umbrella | Zurich argued RSC cannot count settlements or indemnity paid without Zurich’s consent toward Zurich’s retained limit | Trial court ruled RSC may not erode Zurich’s retained limit with settlements made without Zurich’s consent; appellate review dismissed as interlocutory |
| Effect of underlying settlement on United National’s excess duty | RSC argued settled underlying policy period can still lead to excess insurer’s duty | United National argued its coverage may cease after RSC settled underlying insurer | Trial court ruled settlement with a primary insurer does not end United National’s coverage obligations; appellate review dismissed as interlocutory |
Key Cases Cited
- Imperial Cas. & Indem. Co. v. Radiator Specialty Co., 862 F. Supp. 1437 (E.D.N.C. 1994) (discussing injury-in-fact trigger for progressive disease claims)
- Imperial Cas. & Indem. Co. v. Radiator Specialty Co., 67 F.3d 534 (4th Cir. 1995) (affirming district court on related coverage issues)
- Veazey v. City of Durham, 231 N.C. 357 (N.C. 1950) (definition and distinction of final judgment vs interlocutory order)
- Duncan v. Duncan, 366 N.C. 544 (N.C. 2013) (Rule 54(b) and when an order may be treated as final for appeal)
- Tridyn Indus., Inc. v. Am. Mut. Ins. Co., 296 N.C. 486 (N.C. 1979) (partial summary judgment on liability is interlocutory if damages remain)
- Goldston v. Am. Motors Corp., 326 N.C. 723 (N.C. 1990) (general rule against interlocutory appeals; substantial-right exception explained)
- Waters v. Qualified Pers., Inc., 294 N.C. 200 (N.C. 1978) (policy reasons for prohibiting piecemeal interlocutory appeals)
- Cinoman v. Univ. of N. Carolina, 234 N.C. App. 481 (N.C. Ct. App. 2014) (interlocutory order affecting duty-to-defend in a pending action may affect a substantial right)
- Hanesbrands Inc. v. Fowler, 794 S.E.2d 497 (N.C. 2016) (appellant’s burden to show interlocutory order affects substantial right)